Employer-sponsored healthcare coverage would benefit from better access to data, Congress is told

Given the opportunity to audit claims, employers can use the information to reach mutually beneficial agreements with providers — but that opportunity is not widely available.

January 26, 2024 5:15 pm

Employers can stimulate efforts to improve the value of healthcare, but they need help in the form of better access to claims data and prices, according to testimony at a recent congressional hearing.

With those tools in hand, employers can more easily forge provider partnerships that lower costs and raise healthcare quality, health benefit administrators said earlier this month during a hearing of the House Subcommittee on Health, Employment, Labor and Pensions.

Rep. Bob Good (R-Va.), chair of the subcommittee, said such arrangements go back to at least 2012, when Walmart launched its Centers of Excellence program. The model features financial incentives that encourage employees to use specific sites and providers for specialty care such as spine surgery.

Several employers that utilize such models have realized significant savings, Good said, citing data showing Walmart, Lowes and McKesson combined to save $19.4 million through their spine and joint surgery programs in 2017.

The partnerships often take the form of direct contracting between employers and providers. That model generally offers negotiated price discounts for employers, with providers gaining an influx of patients. Christopher Whaley, health economist with the Rand Corporation, said one notable example is seen at Purdue University, which has saved $200 million in healthcare costs over five years, with no rise in premiums.

Contracts also may incorporate reference-based pricing arrangements that tie provider payments to benchmark rates.

Gaining urgency

Contracting solutions are vital at a time when nearly 30% of workers are considered underinsured due to high out-of-pocket expenses, with employers shifting surging healthcare costs to employees through deductibles, according to data cited at the hearing by Andrea Ducas, vice president for health policy with the Center for American Progress.

In a mid-2023 survey of large employers, the Business Group on Health reported projections of 6% cost increases for both 2023 and 2024, after factoring in plan-design changes that keep the estimates from being about 1 percentage point higher. The jumps would be the biggest in the last seven years, with the exception of 2021, when costs soared by 8.2% during the COVID-19 pandemic.

“Concerns abound regarding plan and patient affordability, underscoring the unrelenting demand for delivery system and payment transformation,” the report states. “Employers are focusing on outcomes improvement, lowering the total cost of care, reduction in unnecessary services and prioritization of prevention and primary care.”

Employers are warily eyeing many of the same underlying issues that pose substantial risks and challenges for providers.

“Concerns about the affordability of medications and medical services continue to grow despite investments in technology, clinical innovation and efforts to manage utilization and waste,” the Business Group stated in a separate report.

“Employers, who now face a forecasted higher-than-historical cost trend, also have a greater sense of urgency concerning pricing, fueled by factors that include general inflation, labor pressures on healthcare systems, growing concern over provider shortages, burgeoning mental health needs, missed and deferred preventive screenings leading to more late-stage cancer diagnoses, and worsening of chronic conditions.”

A black box

As employers seek to utilize direct contracting and similar arrangements, “a critical component … is use of transparent data on differences in provider price and quality,” Whaley said during the hearing. “Unfortunately, several self-funded employers who want access to their plans’ claim data for auditing or monitoring purposes have actually had to file lawsuits to gain access to this type of data.”

Large insurers and third-party administrators sometimes argue the prices and network-design information that can be gleaned from claims data are trade secrets, he noted.

“Many employers are unable to access their plans’ claims data, limiting their ability to audit prices and negotiate on their [employees’] behalf as well as [implement] prudently designed plan offerings,” Whaley said.

Pharmacy benefit managers and third-party administrators may limit the number of allowed claim audits and the number of claims per audit, along with imposing other restrictions, said Rep. Lori Chavez-DeRemer (R-Ore.). She co-sponsored bipartisan legislation to ensure health plan fiduciaries have access to deidentified claims. The provisions were included in the Lower Costs, More Transparency Act, which was passed by the House in December and is pending in the Senate.

Michele Beehler, senior director of health and well-being for Schweitzer Engineering Laboratories (SEL) in Pullman, Wash., said data access was crucial to the self-insured company’s ability to strike good deals with providers for its 6,500 workers.

“When we received our claims data after 18 months of trying to get it, we were able to find trends, find opportunities and gaps in our plan, find areas in which we can go and contract directly with providers to negotiate better pricing as well as follow through to make sure that our employees and their family members are getting the best prices and the highest quality,” Beehler said.

Seeking transparency

An expansion of hospital and insurer price transparency requirements could better help employers benchmark prices against market rates, Whaley said. As is, the transparency files “have not been widely useful.”

“One of the things we’ve seen through especially reference-based pricing and direct contracting is that this is a model that allows for lower-priced, high-quality providers to essentially gain volume and gain patient revenue through offering more competitive prices and being a more efficient provider,” he added.

A potential downside for hospitals is that enhanced transparency may also lead employers to pursue site-neutral payment: “One thing that employers have learned is that it doesn’t make sense to pay more for the exact same service if it’s done in one setting versus another,” Whaley said.

Congress should establish a federal all-payer claims database, which would allow employers of all sizes “to make informed choices about which providers to contract with while also encouraging providers to lower their costs,” said Ducas of the Center for American Progress.

A No Surprises Act provision that bars gag clauses on price and quality information has been a boon, Beehler said, giving SEL “more valuable and useful information about the market [and] equipping us with the right tools to find the price that is both fair and reasonable for SEL and the provider as well.”

Laura Josh, general manager for California Schools VEBA (which stands for voluntary employees’ benefits association), said cost information needs to be paired with care-quality information. Purchasers in her state have an advantage over those elsewhere because California’s Office of the Patient Advocate is an accessible source of data about healthcare outcomes.

“We’d really encourage access to that quality information to be more broadly available because it’s been very useful in California,” Josh told the subcommittee.


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